CARTES Execs: Forecast Bright for NFC, Wearables; Consumer ‘Trust Is a Must’

Written by FinTech Futures
11th November 2014

By Kate Fitzgerald, Emerging Payments Editor

Payments industry executives at the CARTES Secure Connexions conference in Paris last week were bullish about NFC’s future in mobile payments, but most agreed banks and merchants still face plenty of challenges in crafting their individual mobile strategies. The 29^th annual CARTES event Nov. 4-6 drew approximately 20,000 attendees from 140 countries.

Though Apple Pay isn’t available yet in Europe, the prevailing idea among CARTES attendees was that the Cupertino, California-based tech giant’s commitment to NFC-based payments will accelerate global growth of existing mobile payments efforts. Already in France, 30 percent of POS transactions are contactless and half of all handsets sold in France are equipped with NFC, François-Xavier Godron, director of the NFC program for Orange France, noted during his opening keynote address.

“We believe there will be multiple approaches to [mobile payments] … there will not be one-size-fits-all.”

—Eric Duforest, Oberthur

NFC also has been steadily gaining a foothold with banks and retailers in the U.K., Australia, Canada and parts of Asia, observed MasterCard Vice President Olive Manahan. Apple Pay’s debut, just as the U.S. migration to EMV goes into high gear, comes at the perfect moment to spur widespread innovation in retail and transit applications, Manahan suggested during a panel discussion on milestones in worldwide chip card adoption.

No ‘One-Size-Fits-All’

But banks and merchants are still a long way from agreeing on a unified approach to mobile payments, according to payments hardware industry executives participating in a general roundtable discussion on payments innovation. The emergence of host card emulation (HCE) as an alternative to NFC for enabling mobile payments at a lower cost—minus the involvement of a SIM card or mobile network operator—introduces yet another option for banks and merchants to consider, executives agreed.

“We believe there will be multiple approaches to [mobile payments] … there will not be one-size-fits-all,” said Eric Duforest, Oberthur’s managing director, payments business Banks may try multiple technologies in launching proprietary mobile payments wallets, and merchants likely will participate in diverse types of payments technologies, he predicted. The result will be a bit of chaos as payments industry participants try to “see through the smoke and find the best [mobile] payment solution to work for them.”

But there is plenty of room for competing mobile payment technologies and approaches—including NFC and HCE—to develop simultaneously over the next few years, according to Ulrich Huewels, senior vice president and general manager at NXP Semiconductors. “[Mobile payments] won’t be a revolution; we won’t see it happen overnight,” he says. But by 2017, the mobile payments landscape should look simpler and less fragmented. “We will see some more breakthroughs, possibly even a new form factor,” Huewels forecasts.

Betting on Wearables

Wearables will likely play a significant role in mobile payments innovations in the future, according to Philippe Cambriel, Gemalto’s president in Europe. “Smart watches will be a very large market, and people are going to be buying these products not to look at the time,” he said. Cambriel predicts a bright future for bank-issued contactless payment wristbands, which he believes could gain broad adoption, initially for payments at specific sporting events and concerts, eventually expanding to broader use cases. Wearable payments products offering the highest level of consumer convenience will win, he suggested. “Payment credentials management will be important to the success of the wearables market,” Cambriel added.

Still, the question of payments security looms as a major threat to mobile payments innovation in general. “If we see a lot of security threats, it could damage the reputation of the entire mobile payments ecosystem,” warned Stefan Hofschen, CEO for Infineon Technologies’ chip card division.

“Trust is a must,” insisted Oyvind Rastad, chairman of Eurosmart, a payments consulting and research firm, explaining that the top priority for mobile payment innovators should be establishing and maintaining consumer trust in mobile payments, without sacrificing ease of use and convenience. This mantra cannot be repeated too often, Rastad said: “Our main challenge is combining convenience with security in mobile payments services.”

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